Situational price sensitivity: the role of consumption occasion, social context and income

Research on consumer reaction to price has been largely confined to examining consumers’ price information search, evaluation of price alternatives, and individual purchase behaviors without regard to situational influences. At the same time, consumption has often been dichotomized in terms of its functional-hedonic nature and has been examined with regard to social influence. Surprisingly, researchers have heretofore not examined the potential effect of the consumption occasion or social context on consumers’ price sensitivity. Further, research examining the effect of household resources on price sensitivity has produced mixed results. We argue that household income effects on price sensitivity are dependent upon the situation. This research addresses two key issues. First, we examine whether individuals are equally price-sensitive when purchasing products for functional (e.g., purchasing frozen vegetables or paper towels) versus hedonic (e.g., purchasing ice cream or cookies) consumption situations and whether social context (i.e., consuming the product alone or with others) influences price sensitivity. Second, we explore the interaction effects of household income and consumption context on price sensitivity. We examine these issues across a series of three studies, finding that consumers’ price sensitivity is in fact attenuated by both hedonic and social consumption situations and that income moderates these effects. Implications for researchers and practitioners are discussed.     

Circular or angular? How nostalgia affects product shape preference

As an important marketing strategy, nostalgia marketing is widely used by enterprises to attract consumers and influence their decision-making. Besides, feelings of nostalgia can be easily elicited in people's daily life and exert a great impact on them. Though the effect of nostalgia on consumer behavior has been extensively studied, whether and how nostalgia affects consumer preference for products with certain visual designs remain underexplored. Our research extends this domain by focusing on product shape preference as a new downstream consequence of nostalgia. Five studies (including one field experiment) demonstrate that nostalgia can increase consumer preference for circular-shaped products, with social connectedness as the underlying driver. Moreover, the indirect effect of nostalgia on circular shape preference via social connectedness is moderated by consumers' current social connections, such that the effect holds true for consumers with a low number of current social connections but is eliminated for those with a high number of current social connections. Together, marketers seeking to increase the sales of circular-shaped products may use nostalgic elements or cues in marketing campaigns.     

Boasting and aspiring,as status‐reinforcing mechanisms in status‐based loyalty programs

In the retail industry, status‐based loyalty programs (SBLP) are commonly used as an important marketing tool to award elevated status to customers who exceed certain level of spending. In contrast to previous studies that have considered “target and bystander” and “member–non‐member” differentiation, this study responds to the need to account for the dynamics in across‐tier effects in loyalty programs (LPs). By undertaking a scenario‐based experiment that focuses on a “face‐to‐face” across‐tier social event, this study examines the joint effects of exclusivity, status visibility and social comparison on LP members’ status perception and willingness to spend. Contrary to prior beliefs that the beneficial effects for targets (e.g., VIP members) in status hierarchies are offset by the negative effects on bystanders (e.g., non‐VIP members), this study concludes that situations when social comparisons occur in SBLPs are not necessarily zero‐sum games. Ultimately, this study uncovered two distinct status‐reinforcing mechanisms–“aspiring” and “boasting”–which LP members may experience in SBLPs. The outcome of this study highlights important implications for companies to pursue different strategies aimed at enhancing members’ status perceptions.     

The effects of romantic motives on numerical preferences

The current research considers whether romantic pair-bond motivations influence numerical preferences. Across cultures and throughout history, the number “2” has been symbolic of a romantic pair bond. We propose that reminders of romance lead people to prefer the number “2” and other associated even numbers. A series of studies demonstrate that romantic motives—goals related to forming a romantic pair-bond—increase preference for the number “2” and other numbers of its parity (i.e., even vs. odd numbers) as well as marketing stimuli featuring even (vs. odd) numbers. This effect is specific to romantic motives and does not occur for motives related to other social relationships, such as work relationships, kinship, and friendship. Consistent with the motivational perspective, the desire to form a romantic relationship statistically mediates the effect of romantic cues on preference for even numbers. Subsequently, the effect of romantic motives on preference for even (vs. odd) numbers are suppressed when the focal goal has been already achieved (i.e., having a romantic relationship) or when an individual endorses a promiscuous lifestyle (i.e., having multiple partners simultaneously).     

Why offer lower prices to past customers? Inducing favorable social price comparisons to enhance customer retention

Price discrimination policies vary widely across companies. Some firms offer new customers the lowest price; others give preferential prices to their past customers. We contribute to the literature on price discrimination in behavior-based pricing by exploring how customers’ social price comparisons, i.e., comparing one’s price to that received by similar peers, impact the optimal structure of price discrimination. Social price comparisons have a negative (positive) impact on customers’ transaction utility if the price charged to past customers is higher (lower) than a new customer’s price. Using an analytical model with vertically differentiated firms, we show that a firm with relatively large market share will reward its past customers with relatively low prices when social price comparisons have a sufficiently large impact on utility. Furthermore, we find that social price comparisons lead to a relaxation of the price competition for new customers. Thus, both firms can earn higher profits when such comparisons are made than when they are absent. We also examine how other factors, such as horizontal competition and strategic customers, interact with social price comparison concerns to impact pricing strategies. Finally, we show how pricing behavior differs when price comparisons are based on historic reference prices rather than on peers’ prices.     

The Effects of Nutrition Label Comparison Baselines on Consumers' Food Choices

Recent legislative changes in the European Union have mandated nutrition labeling for the majority of pre‐packaged foods. This research compared effects of several nutrition labeling formats on consumers' food choices (i.e., the nutrition table, GDA 100 g/ml, and GDA portion). We primarily focused on whether nutrition label information was standardized to a fixed or varying comparison baseline. Fixed baselines (e.g., 100 g/ml) allow consumers to make direct, relative comparisons of products, while varying baselines (e.g., portion size) often require consumers to undertake complex mathematical calculations. Findings suggest that consumers' food choices are likely to be healthier when nutrition label information is presented on a fixed baseline. Gender was found to moderate these effects such that women made healthier choices—but only when the nutrition label baseline was fixed. Thus, the type of comparison baseline is an important characteristic of nutrition labels for public policymakers, public health officials, and academic researchers to consider.     

Abandoning distinctiveness: The influence of nostalgia on consumer choice

This study proposes that when feeling nostalgic, consumers are more likely to choose the option that the majority of others prefer. Four studies consistently demonstrate that nostalgia can enhance consumers' social connectedness, which motivates them to maintain the feelings of connection to the group and thereby increases their preference for majority-endorsed options in the subsequent product choices. Moreover, the strength of social ties between consumers and others moderates the mediation effect of social connectedness. In the weak social ties condition, social connectedness mediates the effect of nostalgia on preference for majority-endorsed products. In the strong social ties condition, the mediation effect of social connectedness diminishes. These findings complement previous work on how nostalgia influences consumer behavior.     

消费者独特性需求对独特产品/品牌偏好影响的研究

本文采用实证研究方法，对有关消费者独特性需求的相关研究作出了比较完整的理论综述，在此基础上就该需求对消费者独特产品／品牌偏好之间的作用关系进行了分析。通过分析了解到本土消费者在对独特性需求的理解上具有一定的特殊性，这种特殊性的产生与中国文化的集体导向特点和当前社会发展处于转型阶段具有一定的联系，这种特殊性的存在一定程度上影响了消费者对独特产品／品牌的偏好。     

Bandwagon vs snob luxuries: Targeting consumers based on uniqueness dominance

Consumers' need for uniqueness (CNFU) has received much attention in identifying intention for luxury consumption. This study investigates how the interplay of CNFU dimensions (i.e. creative choice, unpopular choice and avoidance of similarity), social comparison and psychological entitlement drives consumers’ intention for bandwagon and snob luxury consumption. Useable responses collected from 427 high-income Indian luxury fashion consumers were analysed using SEM and Process-Macro. The creative choice dimension enhances the purchase intention of bandwagon luxury items indirectly via social comparison while psychological entitlement strengthens this indirect effect. The unpopular choice tendency has significant direct effect on snob luxury consumption. The avoidance of similarity dimension enhances purchase intention of snob luxury items directly while it also enhances bandwagon luxury consumption indirectly via social comparison. Psychological entitlement strengthens this indirect effect. This study contributes to the luxury consumption literature by proposing three distinctive types of consumption behaviours relating to snob and bandwagon luxury items based on these interplays.     

Social influence: The role of self‐monitoring when making social comparisons

The self‐monitoring construct (Snyder, 1987) may prove to be useful when examining who individuals choose when making social comparisons. In Study 1, the self‐monitoring propensity of individuals who provide social comparison information and the self‐monitoring propensity of individuals who use such information were examined. Results supported the hypothesis that high self‐monitors have advisors (i.e., individuals to whom they first turn for advice) that are high in self‐monitoring, whereas low self‐monitors have advisors that are low in self‐monitoring. In Study 2, high and low self‐monitors identified their advisors as experts and generalists. Results supported the hypothesis that high self‐monitors have more expert advisors than low self‐monitors. The findings are discussed in terms of the implications for consumer decision making. © 2006 Wiley Periodicals, Inc.     

Conveying Trustworthiness to Online Consumers: Reactions to Consensus, Physical Store Presence, Brand Familiarity, and Generalized Suspicion

Etailers have been losing market share to brick and mortar retailers that also sell products online. Two related studies investigate means by which etailers can convey trustworthiness to consumers and thereby increase purchase intentions relative to hybrid firms. Study 1 examines whether consensus information (i.e., the extent of satisfaction agreement among previous customers) and brand familiarity exert independent or interactive effects on consumer perceptions across retailers that possess, or lack, a physical presence. Study 2 tests a potential boundary condition of the effects of consensus information and brand familiarity by introducing generalized suspicion, which is a common condition for online buyers. Results suggest that consensus information provides a broad cue that conveys trustworthiness and leads to greater purchase intentions for both familiar and unfamiliar brands, as well as hybrid and etailer firms. In comparison, the effects of physical presence and brand familiarity were somewhat narrower in scope. However, we find that consensus information alone is not sufficient to buffer against active, generalized suspicions online. Instead, a combination of high consensus and brand familiarity is necessary for this purpose. The paper concludes with recommendations on how etailers can convey trustworthiness in online exchanges and how future research can build upon these findings.     

Paying before consuming: Examining the robustness of consumers’ preference for prepayment

Prior research on consumers’ preference for timing of payment suggests that consumers prefer to prepay for certain kinds of purchases (e.g., vacations) and postpay for others (e.g., washer dryers). This research extends this finding by first comparing preference for timing of payment for products that vary by type (hedonic vs. utilitarian) and durability (nondurable vs. durable) to reveal that it is only hedonic-nondurable products that elicit a preference for prepayment (study 1). The two studies that follow examine the robustness of the prepayment preference by (1) varying the favorability of the transaction (study 2), and, (2) by eliminating the choice of payment timing from the transaction (study 3). Results reveal that the preference for prepayment for hedonic-nondurable goods is robust when transaction characteristics are favorable but shifts when transaction characteristics are unfavorable. Furthermore, when the choice of payment timing is not offered, consumers become indifferent towards when they prefer to pay for hedonic-nondurable products. The implications of these findings for marketers and retailers are discussed.     

Pick a card: Price ranges and gift card choice

Gift cards are wildly popular with consumers. Vast assortments of gift cards are available at many regional and national retail stores (e.g., grocery, convenience, home improvement). The present research examines consumer reactions to price range amounts displayed on gift cards (e.g., $20-$100; $25-$250). Commonly affixed to gift cards to convey possible purchase loads, price ranges appear to serve as contextual information for a desired purchase load as a gift that can affect beliefs about the recipient's views of the gift card i.e., metaperceptions. Specifically, these metaperceptions tend to be more negative for a gift card displaying a price range when the desired purchase load is the lower bound rather than the upper bound. These beliefs can, in turn, affect gift card choice, but only when social risk is applicable. Four studies provide support for the theory.     

What makes people choose within-domain versus across-domain compensation following a self-threat? The role of self-verification motives

ABSTRACT

Consumers who experience a psychological threat may compensate by acquiring a product that directly boosts the threatened aspect of their self-concept (i.e., within-domain compensation), or they may compensate by acquiring a product that boosts an unrelated aspect of their self-concept (i.e., across-domain compensation). The current research investigates how self-verification motives influence consumers’ preference between these two compensation strategies. In two studies, participants with a self-verification motive displayed an increased preference for within- (vs. across-) domain compensatory products following a self-threat. Underlying this effect, those with a self-verification motive reported a greater desire for products that re-confirmed the threatened domain of their self-concept.     

How Product–Environment Brightness Contrast and Product Disarray Impact Consumer Choice in Retail Environments

A conceptual model is developed to predict how consumers respond to in-store displays as a function of the extent to which a product’s brightness level (i.e., its perceived light-emitting quality) contrasts with that of its background environment and the product’s level of disarray. We show that products whose brightness levels contrast more with those of the retail environment are more preferred because they visually “pop out” (e.g., a dark product in a brightly lit store environment). However, this preference reverses when the products that pop out appear in disarray (i.e., are perceived to have been previously touched by other shoppers). Because most stores are bright environments, darker (vs. lighter) products in disarray are more likely to be perceived as contaminated and less pleasant, leading to avoidance behaviors, evident in reduced sales and preference. Theoretical and managerial implications are discussed.     

Free samples, profits, and welfare: The effect of market structures and behavioral modes

This paper addresses an important and underresearched issue in the economics and marketing literatures: what are the managerial and social consequences when firms use business models that are based on the dissemination of free samples? We develop an analytical model of free samples for both digital and physical goods that addresses three fundamental managerial and social questions. First, what is the effect of different market structures (i.e., monopoly and oligopoly) and cost structures on optimal marketing policy and prices? Second, what is the effect of different behavioral modes on prices and free samples? Third, how do different market structures and behavioral modes affect social welfare?The main conclusion is that a number of standard results do not hold when firms have the option of selling products and of distributing free samples. For example, the optimal strategy for oligopolists who produce homogeneous goods and coordinate their marketing policies is to increase - not decrease - the quantity of sold output. Similarly, under well-defined cost and demand conditions, monopoly can lead to a socially inferior outcome to competition. From a policy viewpoint, the managerial and social welfare implications of free samples depend on the type of market structure (monopoly or oligopoly) and the behavioral modes chosen by the firms in an industry (e.g., whether to coordinate their free sample policies or to behave non-cooperatively).     

Uniqueness and luxury: A moderated mediation approach

Luxury consumption has become a worldwide phenomenon. Irrespective of consumers’ need for uniqueness being considered as an important psychological factor impacting luxury consumption intention, research seldom investigates the impact of CNFU dimensions on luxury consumption. This study investigates how CNFU dimensions (i.e. creative choice counter-conformity, unpopular choice counter-conformity and avoidance of similarity) drive luxury consumption intention in light of the mediating role of social comparison and the moderating role of materialism. Four hundred twenty-eight surveys completed by high-income consumers in India were used for analysis. The findings showed that social comparison mediates the effects of creative choice counter conformity and avoidance of similarity on luxury consumption. Materialism moderates these mediation effects. This study contributes to the luxury consumption literature by explaining how the interplay of psychological and social factor affects luxury purchase intention among the people driven by different uniqueness dimensions. Practically, the findings will be useful to the retailers and marketers of fashion luxury items and brands.     

Key Factors that Influence Consumer Preferences for Natural-Hyped Products

Natural-hyped products are receiving greater attention from and acceptance by consumers worldwide. Environmental factors that foster the demand for natural-hyped products, specifically hemp-based products include the deregulation of the cannabis industry and greater consumer desire for natural foods. Adding to this, the strategic use of stimulant type of cues (e.g., a cannabis leaf) included in product logos, ads, and packaging, seems to create hype associations when evaluating hemp-based products. In this context, this study presents empirical evidence (three experiments and two qualitative studies) that illustrates consumer preference for hemp-based products over ones that do not include hemp as an ingredient (hemp-free). The research focuses on identifying the psychological determinant that orients consumers towards hemp-based products. Findings suggest that the perceived naturalness is the psychological mechanism behind consumers positive evaluation of hemp-based products. Moreover, this study presents evidence that this evaluation is enhanced by the consumer's need for stimulation. Implications of the findings for the role of perceived naturalness and the need for stimulation in marketing strategies are discussed.     

I might try it: Marketing actions to reduce consumer disgust toward insect-based food

Despite the potential health- and sustainability-related benefits of insect-based food products, many consumers do not perceive them as an alternative to conventional foods. This research provides a systematic approach to explain consumer reactions to insect-based food products conducting a series of multi-method studies involving implicit, self-reported, and actual behavioral responses to real insect-based food products (provided by a partner company). The authors investigate how product type (i.e., whether the insect-based food is utilitarian or hedonic in nature) and packaging characteristics (i.e., whether the image of a real or stylized insect is present on the front packaging or not) interact with consumer-related characteristics (i.e., health consciousness and food neophobia) to affect feelings of disgust, which in turn influence willingness to try insect-based food products. A distinctive feature of this research is that a partner company used the findings to change its marketing tactics and observed an improvement in its market performance. Our research has clear implications for marketing managers trying to overcome consumer resistance to eating insect-based foods, as well as retail managers considering marketing such food products.     

Feeling happier when paying more: Dysfunctional counterfactual thinking in consumer affect

In this research the authors examine whether counterfactual thinking, the process of imagining alternatives to reality, can have a detrimental impact on consumers' feelings. Five studies examine the dysfunctional role of counterfactual thinking in the presence of Minimum Purchase Requirement conditional message framing (“X% off all purchases if you spend at least $Y”), and its affective consequences. Results show that the presence or absence of the minimum amount restriction (Studies 1A and 1B), success or failure to meet the restriction (Studies 2A and 2B), and perceived closeness (i.e., outcome proximity) to success or failure in meeting the restriction (Study 3), drastically influence consumer affect to the extent that participants receiving an inferior deal exhibited higher satisfaction than those receiving a superior deal. It is suggested that such promotion‐induced counterfactual thinking polarizes consumer satisfaction, which may impede consumers from arriving at optimal conclusions. © 2010 Wiley Periodicals, Inc.